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Line Of Credit
When the company draws on a line of credit, a journal entry is needed to reflect the draw on the line of credit in the general ledger both as a cash asset and as a liability. For each draw on the line of credit, make a journal entry to debit the cash and credit the line of credit liability account. When you make a payment (decrease) to the line of credit, you would post the payment to the line of credit liability account. Interest payments would be charged to an interest expense account.